First quarter begins with optimism from state business leaders

Colorado business leaders' confidence bounced back to pre-recession levels going into the first quarter of 2011, according to the most recent quarterly Leeds Business Confidence Index (LBCI), released by the University of Colorado at Boulder's Leeds School of Business.

For the first quarter of 2011, the LBCI posted a reading of 54.8 – just shy of the 54.9 registered in the second quarter of 2007 – up from 48.6 last quarter. Business leaders are optimistic about industry sales, profits, employment, capital expenditures and state economic growth.

While the index overall is quite strong, certain components are much stronger than others, according to Leeds School economist and Business Research Division Director Richard Wobbekind, who conducts the quarterly survey. In particular, he said the expectations were extremely positive for sales and profits, but not as rosy for capital expenditures and hiring.

"I think the index suggests that business leaders are telling us that they think their business is back, but they are not telling us that they are planning on hiring," Wobbekind said.

An index of 50 is neutral. An index greater than 50 indicates positive expectations, while an index lower than 50 indicates negative expectations, according to Leeds School researcher Brian Lewandowski, who compiles the survey results for the index.

Overall, business leaders in Colorado believe the state's economy is in better shape than the national economy.

"Our business leaders think we are doing better than the rest of the nation, and I think that really comes down to the fact that they aren't focused so much on employment growth as they are on sales growth and profitability, and they see their businesses doing well in those areas," Wobbekind said.

The first quarter index measuring the prospects for the state economy rose to 56.4 from 49.0 in the fourth quarter, while the national economy index rose from 42.6 to 53.3.

Hiring and capital expenditures had indexes of 52.5 and 53.6 respectively, up from 48.7 and 49.0 last quarter, according to Lewandowski. Business leaders' sales expectations for the first quarter increased to 58.3 from 52.8 in the fourth quarter, and their profit expectations increased to 54.9 from 49.8 last quarter.

"I think the overall reading is a pleasant surprise in terms of the total number being as strong as it is," Wobbekind said. "I see this as a sign that the survey respondents believe the economy is on track."